With shallow water reserves being steadily depleted worldwide, big oil is increasingly targeting its dollars at deepwater. The “World Deepwater Report” forecasts a global capital expenditure for deepwater developments of $57.9 billion in 2003-07, more than double the $25.6 billion that is estimated to have been spent in the previous five years. The US Gulf of Mexico and West Africa together account for 70% of the deepwater capital expenditure forecast. With some 17 billion BOE in 250 prospective offshore fields, Africa now accounts for 16% of all reserve prospects for the period 2003-07. It is of note that prospects for the region now exceed western Europe, which has 12% of the world total, while North America trails with 7%.
US Central Command announced early last week the surrender of Iraq’s former oil minister, Amir Mohammed Rashid, described as number 47 on the US most-wanted list of 55 fugitives from the toppled regime of Iraqi President Saddam Hussein. Rashid was responsible for setting up deals to sell oil outside of the UN Oil-for-Food program, such as cross-border trade with Jordan, Turkey and Syria, as well as smuggling via Iran, which enabled Baghdad to bypass UN supervision of its finances. Such unsupervised finances led to the suspicion that Iraq was using the funds to purchase arms or continuing to develop weapons of mass destruction. That put Rashid at the epicenter of Iraq’s illicit weapons program, since he also headed the group responsible for producing all of Iraq’s most lethal weapons.
Light sweet crude: $26.50/bbl
Natural gas: $5.46/MMbtu
Venezuelan President Hugo Chavez, attempting to bolster his socialist spending programs, has nationalized nearly 40 domestic and international oil services companies operating in his country, with another 20 still under threat. “This is a revolutionary offensive,” Chavez said on national television, adding, “These spaces are now for the people, we have freed them from capitalism, they are for the creation of a new country.” The property seized includes at least 13 oil rigs, 39 terminals, 300 boats, and other installations, including two major gas operations. The seizures come just two months after Chavez sent troops to take over key oil ports in the country. Among the companies seized by Chavez is the Simco consortium, 49.5% owned by the Houston-based Wood Group, and Tulsa-based Williams Cos. Inc.
The US rig count fell much more rapidly than most in the oil and gas drilling industry had forecast, and industry executives say they are uncertain when drilling activity might recover. Baker Hughes Inc. reported a rig count of 975 working rigs for the week ending April 17, compared with 1,743 rigs drilling during the same period a year ago. The weekly rig count released April 17 marked the first time since April 30, 2003, that fewer than a thousand rotary rigs were working in the US and its waters.
Light sweet crude: $64.32/bbl
Natural gas: $3.72/MMbtu
Despite numerous regulatory hurdles and impassioned resistance from environmentalists, Royal Dutch Shell maintains that it is on track to drill two wells in the Arctic Chukchi Sea during drilling season this summer. But Ann Pickard, Shell’s executive vice-president in the Arctic, remains mindful of ever-present uncertainties, namely the company’s exploration plan currently awaiting official clearance by the US Bureau of Safety and Environmental Enforcement, as well as possible legal issues that may emerge given the environmental sensitivity of the project. Pickard has made note of another obstacle that emerged this week by way of the city of Seattle, which ruled that an additional permit will be needed to house the two drilling rigs Shell is sending up north. In a statement released May 4, Mayor Ed Murray explained, “This is an opportunity for the port and all of us to make a bold statement about how oil companies contribute to climate change, oil spills and other environmental disasters – and reject this short-term lease.”
The Canadian province of Nova Scotia reported the addition of seven new offshore blocks in its deepwater region May 5 at the Offshore Technology Conference in Houston. Drawing on its seismic work completed in 2013, Shell plans to drill its first well in this year’s third quarter. Suncor Energy Ltd. and ConocoPhillips are partners on Shell’s existing licenses. In 2014, BP brought in 10 exploration vessels to Nova Scotia to conduct a major 3D seismic program that covered much of Nova Scotia’s offshore region. BP and Shell have committed $1 billion each to their deepwater operations off Nova Scotia.
Light sweet crude: $60.00/bbl
Natural gas: $2.80/MMbtu
THE REST OF THE YARN
This month, we continue our look back at the era of “The Texans,” as we observe who is and who is not in attendance at a very influential South Texas barbecue.
The guests knew from the formation of planes who among them were missing. Lyndon Johnson was at home in the Hill Country recovering from a heart attack, but would likely not have attended anyway. James Aston, president of the Republic National Bank of Dallas, was present, but his plane had landed at San Antonio instead of Picosa. Aston and his passengers – editors from the Dallas Morning News, the most influential paper in the state – had been forced to come the rest of the way by limousine and thread their way through the gauntlet of state police, Texas Rangers and FBI agents guarding the road and the gate to the ranch.
Bundles of white chrysanthemums hung from the oaks about the patio in enormous pots. Caterers from as far away as Fort Worth, 300 miles to the north, attended the smoking banks of beef tenderloin and roasted corn on butane-fired barbecue pits, while subdued strains of music issued from costumed mariachis. Surprisingly, the center of attention was not the President and first lady, but their host, the former Secretary of the Treasury and chairman of Democrats for Nixon, an efficient organization that would help carry Texas for Nixon in the upcoming 1972 election.
It was truly John Connally’s finest hour, and he radiated confidence and respectability. Gone was the vermilion ranch suit from his early days as governor of Texas, replaced by more formal attire acceptable in any capital of the world.
His silver hair and slightly dissolute good looks made him instantly recognizable.
Next month, the President and first lady receive a guided tour of Connally’s digs, while the receiving line begins queueing up.
What was Venezuela’s first commercial oil well and where was it located?
If you would like to participate in this month’s quiz, e-mail your answer to email@example.com by noon, May 15. The winner, who will be chosen randomly from all correct answers, will receive a $50 gift card to a nice restaurant (courtesy of the ProTechnics Division of Core Laboratories).
ANSWER TO APRIL’S QUIZ
The first Gulf of Mexico well completed out of the sight of land was the Ship Shoal Block 32 well, which was located 12 miles off Terrebonne Parish, Louisiana, and was completed in 1947.
MARCH QUIZ RESULTS
There was no winner this month.